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Total Cost of Ownership

Total Cost of Ownership (TCO) is a method for quantifying the costs for every activity along the supply stream, including acquisition, transportation, storage, and selling of goods. TCO allows strategic sourcing decisions to incorporate social costs, which historically have been difficult to assess. The working session also introduces a TCO calculator, which allows a side-by-side comparison of up to four suppliers and the analysis of multiple sourcing scenarios.

The Total Cost of Ownership allows companies to account financially, for each activity along the supply chain including costs associated with the acquisition of materials, transportation, storage, and the selling of purchased good or services. The goal is to equip companies to make strategic sourcing decisions.

The TCO Calculator, a key tool available only to participants of the MEP Supply Chain Optimization program, facilitates a side-by-side comparison of suppliers, analyzing multiple sourcing possibilities on a global scale. TCO helps minimize total costs while maximizing value to the customer.

OBJECTIVES OF THE PROGRAM

Provide participants with an overview of Total Cost of Ownership concepts

Review key elements of TCO

Contrast Piece-Part Variance method with TCO costing

Understand the importance of implementing an effective TCO strategy

Learn how to identify and measure TCO cost drivers

Demonstrate the use of the TCO calculator

Learn how to input data, interpret results and use the output of the analysis to make strategic sourcing decisions.

THIS WORKING SESSION IS COMPRISED OF THE FOLLOWING KEY EDUCATIONAL ITEMS